The automotive industry is among the highest-regulated sectors in the United States, with motor vehicle manufacturing governed by several federal agencies. The National Highway Traffic Safety Administration (NHTSA) is the one that handles product recalls and compliance issues for faulty tires, malfunctioning mirrors, broken baby seats, and other vehicle components.
But just how much do product and quality control managers like you care about recalls? And do you truly realize the consequences of poor recall management? You might think that recall notices impact a select few manufacturers, perhaps the big car brands, and it’s rare for OEMs and car parts manufacturers to receive fines from the government. But the NHSTA and other agencies are getting stricter, hitting companies like yours with enormous civil and criminal penalties.
Here are three reasons to care about automotive product recalls and compliance issues.
#1. Penalties are Severe
Automotive companies receive higher penalties for product safety non-compliance than almost any other sector. The NHTSA, in particular, hands out multi-million-dollar fines like they are going of fashion.
Consider Daimler Trucks & Buses, one of the world’s largest commercial vehicle manufacturers, which received an eye-watering $30-million fine for recall non-compliance, one of the highest civil penalties in American automotive history. The NHTSA said Daimler failed to collect potential safety information correctly, and the company must now implement an advanced data analytics program that identifies future safety defects.
But that $30 million fine is small fry compared to the one received by Hyundai and Kia Motors after failing to comply with recall notices. The NHTSA issued penalties to both companies that totaled a record-breaking $210 million.
Again, you might think these are one-off cases where the government targets big brands with bulging budgets and lets smaller companies like yours off the hook, but that’s not the case at all. OEMs, car parts manufacturers, and other small- and medium-sized organizations receive penalties from agencies all the time. The NHTSA even keeps a list of penalized companies here.
Why You Should Care
Civil and criminal penalties from the government for product recall management non-compliance can cripple your organization. Can you afford to pay thousands, or even hundreds of thousands, of dollars in fines?
Recommended Reading: Vehicle Recall Management Software
#2. Non-Compliance Damages Your Reputation
As well as the financial consequences, product recall non-compliance has a detrimental impact on your reputation. As previously mentioned, agencies like the NHTSA name and shame non-compliant organizations online, and the media often picks up on these cases.
They say all publicity is good publicity, but not in the event of public safety non-compliance. The American public is sensitive about auto accidents and highway safety. Companies that compromise security because of a failure to respond to a safety notice won’t get the best press.
Think of it this way. Would you have dinner in a restaurant that failed a hygiene inspection? The answer is, most likely, no. So why would the public trust your company if you didn’t respond to a public safety notice?
Why You Should Care
You might think enforcement action for a public recall management violation is rare, but agencies like NHTSA issue penalties all the time. Even if you pay a fine, the public relations nightmare is something you can’t afford.
Recommended reading: Top 10 Factors That Determine Media Coverage of a Recall
#3. Lives are at Risk
Many small auto companies forget about the victims of public safety non-compliance: Drivers who have had an accident because of faulty OEM parts or pedestrians killed by cars that shouldn’t have been on the road. Every year, over 38,000 people die in auto accidents in the U.S., while 4.4 million receive injuries so severe they require medical attention.
There are many reasons behind these deaths and injuries, but poor public safety protocols make up a considerable slice of the pie.
Why You Should Care
You might think a federal agency is over-reacting when it issues a safety notice about an OEM part with the wrong label, but there’s a good reason for it:
Actual lives are at risk on the road every single day.
Recommended reading: How to Optimize Different Product Recall Plans
What’s the Solution to Product Recalls and Compliance Issues in the Automotive Industry?
Meet Trievr. It’s the No.1 recall management software for product recall notices, recall response times, and all things product recall management. With invaluable features such as real-time recall reports, recall response templates, and collaborative tools, your automotive company can prevent enforcement action from the NHTSA and other government agencies, safeguard your hard-earned reputation, and improve public safety.
Automobile companies like manufacturers, resellers, and design and development agencies can track the latest product safety recall notices in real-time and avoid non-compliance.
Before You Go
Smaller auto companies think the government only targets big vehicle manufacturers, but this isn’t true. Business owners of all stripes might trigger penalties or enforcement action from authorities, so they should know their product recall responsibilities. Software like Trievr optimizes recall responses and recall response times, providing companies like yours with peace of mind.